Why Questions?

Board members are charged with the responsibility of evaluating a company’s culture and systems to ensure efficient and profitable operations. 101 Tough Questions were designed to stimulate discussion about the business to help keep the company on track.

For example, the very first question I recommended a board member should ask is “What business is the firm in?” At first blush, the answer to this question appears deceptively obvious. Of course you know what your company does. But the way you answer this question can make or break your business. In the early 1900s, railroad executives limited the definition of their business to railroading. Had they defined their business more broadly, as “transporting cargo” perhaps, or “transporting people,” they would have had opportunities to expand into trucking, airlines and bus companies. More recently, many dot-com companies failed to recognize that they were in the business of selling software applications and hi-tech products, not just designing those products. They made the mistake of devaluing their sales and marketing departments, or they focused on products with such limited audiences that that they could not make the sales they needed to be profitable.

At the conclusion of any board meeting, after the board had considered all the operational decisions on the agenda, the board might open the floor to new business. Armed with this list of questions, a board member might then ask: “Have the company policies been established in writing?” (Question 102), or “Is outstanding performance recognized and rewarded significantly?” (Question 65), or “Has the company reviewed its legal structure (S corp, partnership, LLC, etc.) to determine that it is optimum?” (Question 12).

These questions, then, can stimulate further discussion. Sometimes the question can easily be answered in the affirmative: “Yes, the firm has a current and complete policy manual.” The question may initiate a review of the policy manual for relevance. The question may identify a serious deficiency: “There is no policy manual, or the manual is outdated or inadequate, and we should immediately implement a solution.” Finally, the question may reveal that a written policy manual is not relevant or useful for this particular firm, or is a low priority. As we discuss these questions, I ask that you keep in mind that they are meant to provoke thought and discussion, not to instruct the board on the right or proper way to do business. The questions are not meant to illustrate what a company should do, but rather to illustrate what a company should consider.

These questions may be equally useful for established firms as well as for companies just getting started. You would think that a firm with a long history would already have the answer to these questions well in hand. But consider questions 13: “Does the company have a formal organization chart?” Many established companies would proudly say that they do indeed have such a chart, but when a board member locates one in the files I suspect that some key individuals will have left the firm or retired.

Many companies end up with certain policies and practices because of haphazard decisions that were made as the company grew and evolved. Sometimes that works pretty well for a while, but sometimes it puts the company at serious risk. Keeping in mind that these questions are not directives, but merely launching points for discussion, board members and managers can constantly evaluate the company’s position on key organizational issues. Asking these questions ensures that a company makes decisions about its organization as a result of thoughtful consideration instead of by default.

Fly, or Crash and Burn?

Some years ago, I chartered a flight in a small, privately-owned aircraft. As I waited for the flight, I was surprised to see the pilot walking around the plane with a written checklist. He checked the landing gear, the wings, the tail and so on, and at each step consulted his list and made the appropriate notation. I admit the procedure made me a little apprehensive about the imminent flight. Was this a rookie pilot who needed to consult his paperwork to make sure he didn’t miss anything? Was he forgetful and likely to overlook something if he didn’t use a list?

When I asked the pilot about it, he assured me that he was very experienced and all his faculties were completely intact. “I use this list,” he told me, “even though I’ve done hundreds of pre-flight checks, because the stakes are just too high if I forget just one item just one time.”

Certainly, the stakes are high for corporate boards and CEOs, now more than ever before. To make sure a company is operating at maximum efficiency, certain critical questions need to be asked and answered and any deficiencies addressed.

I recently attended a meeting of a board of directors for a young company as a guest and advisor. Some of the board members felt that the company had not reached its potential. At the end of the meeting, I was invited to make suggestions that I thought would be constructive with respect to company management. I asked several key questions, but time constraints prevented the board from considering in a single meeting all of the issues I believed were important.

Subsequently, I developed a list of 101 questions to use as a checklist in assessing the operational health of corporate organizations. Using this list is akin to checking the landing gear, wings and fuel levels before a flight. “Is the expertise of senior management congruent with current critical success factors?” “Are unprofitable products and services abandoned?” “Is outstanding performance recognized and rewarded significantly?”

Each item in the checklist is phrased as a question, just like on Jeopardy, because I don't presume there is a one-size-fits-all answer for every organization. And the questions should be asked, answered, then asked again some months or years later. Often, a company's needs will change over time as will the answers to these critical questions.

Anyone who needs to evaluate the “flight-worthiness” of a company will benefit from a discussion of these significant questions: board members, potential investors, executives, and everyone else concerned with the company’s ultimate results. Armed with this initial checklist, you can begin to determine whether your organization is poised for flight or about to crash and burn.